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Entrepreneurship in the UK

March 1 2006 - The London Business School has released findings from its 2005 Global Entrepreneurship Monitor United Kingdom (GEM UK) survey of 32,500 adults across the country on their views about entrepreneurship and whether they were involved in any entrepreneurial activity.

The 18-24 age group were the most positive in their attitudes towards entrepreneurs with 69.7 per cent considering it to be a good career choice and 13.4 per cent expecting to be their own boss within three years.

GEM UK examined the effect of enterprise training on levels of entrepreneurial activity for the first time. This is a major feature of the British government's policy of fostering of more entrepreneurship in the UK. The survey shows that enterprise training doubles the likelihood of setting up a business for most age and gender groups. For example, women who have had some enterprise training were twice as likely to be involved in an entrepreneurial activity (6.9 per cent compared to 3.3 per cent) than those who had not.

In 2005, 12.4 per cent of the US adult working population and 9.3 per cent in Canada were involved in some form of entrepreneurship. The UK came in third of the G7 economies with 6.2 per cent. The Total Early Stage Entrepreneurial Activity (TEA) index used by the survey identifies the proportion of adults of working age who are either setting up or have been running a business for 2005 for less than 42 months. There is a substantial difference between male and female entrepreneurship levels in the UK - 8.2 per cent of males are entrepreneurs, compared with 3.9 per cent of females.

Entrepreneurship also varies across the country, from 8.3 per cent in London to 3.8 per cent in the North-East of England. Generally, however, rural areas have higher levels (8.2 per cent) of entrepreneurship than urban ones (6 per cent).

Ethnic minority groups are considerably more entrepreneurial than their white neighbours with Non-White ethnic minority groups being 40 per cent more likely to be entrepreneurs. Black Africans are the most entrepreneurial. They are over three times more likely to be entrepreneurs than the white British while people of Indian and Pakistani origin being twice as likely as white British people to be entrepreneurs.

According to Rebecca Harding, GEM Global chief executive, London Business School, a cultural change is evident in the UK. "Since 2002, there does appear to be a step change in attitudes towards entrepreneurship especially among the young. Fear of failure, however, remains a challenge since, over the period as a whole, there has been little change in this attitudinal indicator. If the Government is to close the gap between the UK and the USA in entrepreneurial activity, then this is a key feature which should be addressed with some urgency."

There has been a striking change in the proportions of necessity and opportunity entrepreneurship in the UK. Necessity entrepreneurship fell from 1.4 per cent of the adult working age population to a mere 0.7 per cent between 2001 and 2005. Opportunity entrepreneurship increased slightly (from 5.1 to 5.2 per cent) over the same period. The UK is the only country in the G7 to have shown this pattern of change.


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